USDOC, International Trade Administration

 SOURCE:       USDOC, International Trade Administration
 PROGRAM:     Market Research Reports
 UPDATE:      Monthly
 ID NUMBER:   IT MARKET 111109057
 END YEAR:    1992
 UPDATED:     09/18/92
 | 9103
 | CC588
 | ISA
 | ISA9103
 | SPT
 | EAP
 This article is derived from a report titled:  "The Japanese Recreational
 Boat Market in Japan", dated March 1991, prepared by Wallace Offutt
 Consulting Co., Darien, Connecticut.  This article consists of 51 pages and
 contains the following subtopics:
 According to the Japanese Ministry of Transport, there is one recreational
 boat for every 447 people in Japan.  In the United States, the figure is one
 boat for every 15 Americans, or nearly thirty times the boat ownership found
 in Japan.
 Japan is a developing country with respect to recreational boating, but this
 situation is rapidly changing.  Japanese today are working fewer hours and
 taking more frequent and longer vacations.  The outlook is that improvement
 will continue in the future.  The government is taking measures to encourage
 fewer working hours and to promote more leisure activities, including marine
 recreation.  A resort development law is encouraging a national network of
 resorts, many on the seacoast, and the government has a ten year program to
 increase marina space from 50,000 boats to 400,000 boats.
 Japan is at the beginning of a long cycle of growth in recreational
 boating.  While there is a shortage of marina space which will not be
 relieved soon, the main ingredient is already in place:  the Japanese
 consumer is ready and willing to spend money on boats.  Even if Japan's
 pleasure boat ownership eventually only reaches a fraction of  that of the
 U.S., there will be a great many boats sold in Japan over the next ten or
 twenty years.  Based upon Japanese domestic shipment data and import/export
 statistics, we estimate that the Japanese recreational boat market in 1990
 was nearly $600 million.  We estimate that growth will average around 8% per
 annum over the next three years.
 American manufacturers which have established a strong presence in the
 Japanese market have already seen very good business.  Between 1986 and
 1990, imports of boats into Japan increased some 14 times to reach over $385
 million.  Imports from the U.S. accounted for roughly half of this amount
 and in 1990 alone grew by 102%.
 The recent boating boom has also benefitted Japan's manufacturers.  Japan's
 boating giant, Yamaha Motor Company, as well as other local producers, have
 been upgrading their products and producing larger and larger boats to
 respond to consumers' desire for American-style boats. Japanese
 manufacturers are not prepared to cede their market to foreign manufacturers.
 As is the case with most products in Japan, consumers want high quality and
 good after-sales service in recreational boats.  Most imported boats are
 handled by local agents which provide the service demanded by Japanese
 consumers.  Foreign companies which are responsive to the marketplace and
 are careful about quality have done very well.
 American manufacturers have done especially well in the power boat segment,
 which constitutes around 95% of the market.  Japanese enjoy fishing and
 American sportsfishing boats have been very popular.  Most major American
 powerboat brands are found in Japan.  The Italian boat producers and
 Taiwanese-produced powerboats have also done well.   In sailboats, however,
 European models are generally preferred for their sturdy construction, their
 quality, and their interior designs.  The French, led by Beneteau, have the
 largest share of the sailboat market.
 There are no overt barriers to market entry.  However, Japan's boat operator
 licensing system is time consuming and costly, making it too difficult for
 newcomers to enter the market.  And there is an inspection system for new
 imported boats that is expensive, time consuming, outdated and unnecessary,
 the effect of which is to make market entry unnecessarily difficult for
 foreign manufacturers.  Most Japanese in the industry would like to see both
 of these systems changed.
 We estimate that the Japanese recreational boat market (including inflatable
 boats, power boats, sailboats, rowboats and personal watercraft) in 1990
 amounted to around Yen 89.1 billion ($594 million at 1990's average exchange
 rate of 1$ = 150).  This is a 49% increase from our estimate of Yen 59.7
 billion for 1989.  Tables A and B provide our estimates in U.S. dollars and
 in yen of the market size and growth over the next three years.  Tables 1
 through 15 at the end of this report provide detailed breakdowns of most of
 the figures in the table.
 The statistics for measuring the size of the market are somewhat
 questionable.  One problem is that the figures for domestic production,
 which are based on statistics compiled by the Japan Boating Industry
 Association (JBIA), appear to be somewhat incomplete. The JBIA data is based
 upon an annual survey of association members and other firms, and not all
 manufacturers are included.  While the Ministry of Finance (MOF) import and
 export figures appear to be very complete, their categories and those of the
 JBIA are in some cases different, making comparisons difficult.  A second
 problem is that JBIA-reported figures on personal watercraft imports and
 exports are larger than the MOF figures for the corresponding period,
 suggesting the possibility that these figures are not on the same base or
 that there is some over-reporting or double counting of these figures on the
 part of JBIA members.    With these caveats, the estimates given in Tables A
 and B seem to present a reasonable picture of the market.
 Boat Ownership
 According to estimates by the Japan Boating Development Center (JBDC), at
 the end of 1989 there were approximately 275,000 recreational boats in use
 in Japan.  This compared with around 80,000 in 1970 and around 200,000 in
 1980.  Strong growth of recreational boating was seen in the early 1970s,
 but the oil crisis came as a blow to the industry and there was little
 growth after 1974.  By boat type, the JBDC estimates that in 1989 there were
 209,000 motorboats, 55,000 sailboats, and 11,000 inflatables.  With a
 population of 122.8 million (1988), this works out to approximately one boat
 for every 447 Japanese.
                              TABLE A
                    Estimated Market for Japanese
                          Recreational Boats
                         (Millions of Dollars)
                       1988      1989      1990    Est. Growth '91-'93
 Import Market          118       201       351           +7%
 Local Production       261       306       302*          +5%
 Exports                110        75        58          -15%
 Total Market           269       432       594           +8%
 Imports from U.S.      58         96       180           +7%
 Exchange Rates        128        138       150
 Future Inflation Rate Assumed:  0%
 1990 Import Market Shares:   U.S.A., 28.6%;  Italy 6.3%;  Taiwan: 5.4%;
 United Kingdom,  3.9%;  France, 2.1%;  Canada, 1.1%
 Receptivity Score:   Sailboats:  4   Powerboats:  5
 In contrast with Japan, in the United States, there were 10.8 million boats
 registered in the fifty states and territories in 1989, according to U.S.
 Coast Guard figures published by the National Marine Manufacturers
 Association (NMMA).   However, in many states, smaller boats without engines
 do not have to be registered, and the NMMA estimates that there were 15.6
 million boats in use in that year.  That works out to be around one boat for
 every 15 persons, or 29 times the ownership in Japan.
 Most Japanese boats are small, probably as a consequence of the difficulties
 involved in finding marina space (see below).  According to data produced by
 the JBDC, approximately 13% of Japanese boats are below three meters in
 length, 41% are between three and four meters, 22% are between four and five
 meters,  9% are between 5-6 meters long, and 7% are between six and seven
 meters long.  Thus, 92% of boats are below seven meters long.  Another 6%
 are between seven and eight meters long, leaving only 2% of boats over eight
                               TABLE B
                     Estimated Market for Japanese
                           Recreational Boats
                            (Millions of Yen)
                       1988      1989      1990    Est. Growth '91-'93
 Import Market       15,088    27,802    52,620           +7%
 Local Production    33,365    42,201    45,246*          +5%
 Exports             14,080    10,352     8,742          -15%
 Total Market        34,373    59,651    89,124           +8%
 Imports from U.S.    7,365    13,308    26,934           +7%
 Future Inflation Rate Assumed:  0%
 1990 Import Market Shares:  U.S.A., 28.6%;  Italy 6.3%;  Taiwan: 5.4%;
 United Kingdom,  3.9%;  France, 2.1%;  Canada, 1.1%
 Receptivity Score:   Sailboats:  4   Powerboats:  5
 Available data on boat ownership provides some interesting insights into the
 boat market.  Table C gives the results of a survey of 634 boat owners
 conducted in September, 1989 by the Japan Shipbuilding Promotion Council
 (Nihon Zosen Shinko Zaidan).
 It would appear that the larger and more expensive a boat, the less able an
 individual is to handle the expenses and the more likely it will be owned
 jointly by friends or by a corporation.  A 1990 Kazi Magazine boat users
 survey (see below) confirmed the basic finding of this survey that many
 boats in Japan are jointly owned.
                                TABLE C
                       Boat Ownership in Japan
 Type of Boat          Individual    Jointly Owned     Corporate
 Motorboats                 72             9                18
 Fishing Boats              93             2                 4
 Sailboats (w/o engines)    64            28                 8
 Sailboats (w engines)      48            36                17
 Personal Watercraft       100             -                 -
   (jet skis)
       TOTAL (average)      69            18                12
 Source:   Japan Shipbuilding Promotion Council
 Leisure Time
 It is frequently pointed out that Japan is well behind the U.S. and the rest
 of the Western world when it comes to leisure activities.  In many respects,
 Japanese have less opportunity to participate in many leisure activities
 than do the citizens of other countries.  Japanese work longer hours and
 they have fewer vacation days per year.  They also have fewer leisure
 facilities per capita than many other countries, and such facilities are
 farther away from their homes.
 According to Japanese Ministry of Labor figures compiled by the Leisure
 Development Center, in 1987 the average Japanese in the manufacturing sector
 worked 2,168 hours per year.  This was 219 more hours than an American
 worker, 230 hours more than a British worker, 523 hours more than a French
 worker, and 526 hours more than a worker in West Germany.
 These longer working hours naturally result in fewer leisure hours and less
 vacation time.  In 1988, only seven percent of Japanese companies and 30% of
 Japanese workers had a complete five-day work week.  While nearly 53% of
 companies and 80% of workers had at least one Saturday off each month, the
 majority still had to work several Saturdays.  In addition to having fewer
 weekend days off, the average Japanese worker gets nine days of vacation per
 year versus 19 in the U.S., 23 in the U.K., 29 in West Germany, and 26 in
 However, the important thing to note is that things are changing in Japan.
 In 1970, 95% of companies and over 80% of workers worked every Saturday, so
 compared to that time, the present situation is far improved.  Beginning in
 1989, Japanese government offices began closing two Saturdays per month
 while the banking and securities industries went to a complete five-day work
 week.  The pressure on other companies to move in this direction continues
 to mount.  There is discussion about eliminating Saturday school hours in
 Japan, which would have a big impact on weekend family outings.  The
 government has an official target of achieving an 1,800 hour work week by
 the year 2,000.  The press reports that more companies are encouraging -
 some even requiring - their employees to take all of their vacation days,
 and to stagger vacations.  It is clear that the trend in Japan is towards
 more time for leisure and longer holidays.
 Japan's Boating Conditions
 As an archipelago, Japan is blessed with ample access to the sea.  Japan has
 some 33,000 kilometers of coastal shoreline.  While this is considerably
 less than the 85,500 kilometers which the U.S. (excluding Alaska, Hawaii and
 the territories) has, on a per capita basis the comparison is similar.  It
 is said that no one in Japan lives farther than 2-3 hours from the sea by
 road or rail.  On the other hand, compared with the U.S., Japan has
 relatively few lakes and rivers which can be used for pleasure boating.
 Since nearly half of all boats in the U.S. are used on such bodies of water,
 this suggests that boating in Japan is likely to develop along somewhat
 different lines.
 Further, Japan is situated in the temperate climate zone, and, with the
 exception of Okinawa and a few of the southern islands, it has no areas such
 as Florida or California where pleasure boating is a year-round activity.
 In northern Japan, pleasure boating is mostly a summer activity.  From Tokyo
 to the southwest, the most enthusiastic boaters will be active throughout
 much of the year, although the average boater will probably not be on the
 water for six months of the year.  In fact, for some boaters, the season is
 only three months, for June in Japan is normally very rainy, and October
 often brings typhoons, so many Japanese want to store their boats for the
 winter by the end of September.
 Since many Japanese boaters are boating in the ocean or in large bays open
 to the ocean, they must cope with rougher waters than most American boaters
 are used to.  Boaters in the Tokyo area, where one of the largest population
 centers is located, boat on Tokyo Bay, Sagami Bay or Suruga Bay, all of
 which are open to the sea and subject to rapidly changing conditions.  On
 the other hand, Japan's Inland Sea, situated between the main islands of
 Shikoku and Honshu, provides an area several hundred miles long and
 averaging perhaps 40 miles wide where there are many islands and very good
 boating conditions.
 In conclusion, boating conditions in Japan are perhaps not ideal, but they
 are sufficiently good to make boating an attractive leisure activity given
 sufficient industry promotional and educational activities, affordable
 boats, and adequate boat storage facilities.  It can be expected that the
 more soundly-built boats will be more suited to the Japanese market.
 Marina Facilities
 The boat storage situation in Japan is rather difficult to fathom.  On the
 one hand, official figures report that there are few marinas and few places
 to put boats.  On the other hand, boat sales in Japan have been soaring and
 marinas advertise that they have space.  Somehow, most boat dealers can find
 their customers a place to put their boats. No one talks as though the
 shortage of marina space is going to kill off the industry.
 There is no doubt that Japan suffers from a lack of accessable and
 reasonably priced marina facilities.  A chronic shortage of proper marina
 facilities has been an obstacle to the industry's growth to date, and it
 will no doubt continue to be this way for some years.  This is largely a
 consequence of the density of population in Japan, although the fishing
 industry in Japan also is an important obstacle, something that will be
 discussed further below.
 The official statistics on  marinas in Japan and the comparison with the
 United States show just how far behind Japan is in this area.  According to
 the National Marine Manufacturers Association, there were 8,320 marinas
 (including boatyards, yacht clubs, dockominiums, parks and others) in the
 United States as of the end of 1989.   In contrast, as is shown in Table D,
 Japan still has fewer than 400 marinas.
                             TABLE D
                         Marinas in Japan
         Boat              Public           Private          Total
       Capacity            Marinas          Marinas
       50 or less            3               111             114
       50 to 100             3                99             102
       100 to 200           10                87              97
       300 to 400            8                23              31
       400 to 500            7                 9              16
       500 to 700            3                 4               7
       700 or more           1                 0               1
            TOTALS          40               338             378
 Source:  Ministry of Transport, Ports and Harbors Bureau, Data as of July,
 According to the Ministry of Transport, Japan's 378 marinas can accommodate
 approximately 50,000 boats, with the 40 public marinas able to handle around
 10,450 boats (an average of 261 boats each) and private marinas handling
 another 40,000 boats (an average of 118 boats each).  Not only is the number
 of marinas small, but the individual marinas are also small.  The largest
 marina in Japan at the present time is the Enoshima Yacht Harbor, which
 accommodates 1,050 boats.
 The next largest marinas are only half that size.  Japan's marinas are
 distributed as follows:  Hokkaido, 8; Tohoku, 10; Kanto (Tokyo area), 50;
 Hokuriku, 30; Tokai, 53; Kinki (Osaka area), 84; Chugoku, 61; Shikoku, 41;
 Kyushu/Okinawa, 40.
 The marinas that Japan has are expensive, although perhaps not as expensive
 as one might expect.  Nationwide, the average annual cost of a private
 harbor marina in 1990 was nearly $3,200, according to the results of the
 Kazi Magazine survey mentioned earlier.  This cost rises sharply for marinas
 in urban areas.  While the Kaji survey does not break down the cost of
 private marinas by region, the survey reported the average costs for all
 boats in Tokyo.  See Table E.
                               TABLE E
                Annual Boat Storage Costs in Tokyo, 1990
  Percentage of Boats           Yen                  Dollars
          21                   No Cost                No Cost
           5                 Below 50,000            Below 370
           7               50,000-100,000              370-741
          24              100,000-300,000              741-2,222
          17              300,000-500,000            2,222-3,703
          16              500,000-1,000,000          3,703-7,407
           7            1,000,000-1,500,000          7,407-11,111
           2            1,500,000-2,000,000         11,111-14,815
           1                 Over 2,000,000           Over 14,815
 Source:  Kazi Magazine readers survey, March, 1991
 We think that the official figures understate how many boats are actually
 stored at marinas.  There seem to be many marinas which have a large number
 of boats stored on land, and these do not seem to be in the official
 figures.  The Japanese boating magazines frequently carry lists of marina
 availability in Japan, and usually there are several hundred marinas showing
 storage availability.  Usually, however, this is land storage for small
 powerboats or sailing dinghies..  And often, space is only available for
 those who buy their boats through the marina.  The March, 1991 issue of Kazi
 Magazine listed 170 marinas which had a combined total of 4,671 available
 spots.  So there is storage, and the official data would lead one to believe
 that there is not a single spot to be had.
 The biggest problem appears to be the scarcity of marina space for large
 boats in the Tokyo area.  The public marinas have waiting lists of over ten
 years, and the private marinas are full.  In the event that a slip is
 available, there are very high up-front marina membership payments.  Wet
 marina storage in the Tokyo area is probably not an option for any but the
 very wealthy.  In the more remote areas, however, marina space is available
 at relatively reasonable rates.  150 miles from Tokyo in the Hokuriku
 district on the Sea of Japan, for example, nearly 50% of boats are kept free
 of cost, and only about 7% of boat owners pay over Yen 300,000 per year to
 dock their boats.
 The Fisheries Problem
 It will be noticed that most of the above marinas are located in Japan's
 large bays or in the Inland Sea where there is natural protection from waves
 and weather.  There are few marinas located on coastal areas directly
 exposed to the ocean because of the expense of constructing breakwaters.
 Most natural ports in Japan are designated fishing ports where the fishing
 industry has extensive rights and where it is extremely difficult for
 private developers to build  marinas.  There are also many problems between
 recreational boaters and fishermen in places where the two activities
 coexist.  Fishermen complain of damaged nets, disruption from the wake from
 pleasure boaters, bad manners, etc.
 To understand the marina situation in Japan, it is essential to understand
 the situation with Japan's fishing industry.  It is difficult for most
 Americans to appreciate, but the fishing industry in Japan is still
 extremely important.  Japan has been the world's leading fishing nation,
 producing nearly 12.5 million tons of fish and seaweed, or 13% of the
 world's total, in 1987.  In terms of the production value of the catch,
 coastal fishing in by far the most important, followed by offshore fishing
 and then by deep-sea fishing.
 A visit to many ports even near Tokyo finds large numbers of fishing boats
 actively engaged in fishing activities.
 Fishing is an ancient industry in Japan and it has always had a privileged
 position.  Following World War II, the Japanese Parliament in 1950 passed
 the Fishing Port Law in order to ensure a stable and secure supply of marine
 products and to promote efficient fishing operations.  The law established a
 system of fishing port management and official fishing port designation by
 the Minister of Agriculture, Forestry and Fisheries (MAFF).  Ports
 designated as official fishing ports received development assistance,
 subsidies and protection from the government.   By 1956, some 2,611 ports
 had been officially designated as fishing ports, and the number has slowly
 grown over the years.  It is worth noting that, on average, only 104 fishing
 boats are based in each of Japan's 2,953 fishing ports.  Table F summarizes
 the fishing situation in Japan.
 In addition to fishing ports, there are 1,095 other ports and harbors which
 fall under the perview of the Ports and Harbors Law and which are important
 in international trade and domestic transportation.  Recreation is a low
 priority for the administrators of these ports and harbors.
 The relevance of this all for the recreational boating industry is that
 because of the "rights" of the fishing cooperatives in these ports, it has
 been extremely difficult (read "expensive") for private developers to
 develop marinas.  Fishing cooperatives have been able to successfully argue
 that pleasure boating (as well as other projects) encroaches on their rights
 to earn a livelihood, and they have been successful in forcing large
 payments in return for giving up their rights to various fishing areas.  It
 has been reported that local fishing unions won an award of around $300
 million when land-fill for the New Kansai International Airport displaced
 fishing grounds near Osaka, and that another large amount of compensation
 was paid to local fishing cooperatives when the new Tokyo Bay Bridge was
                              TABLE F
                   Selected Data on Japan's Fishing
                          Industry, 1988
             Fishing Ports                2,953
             Fishermen                   392,400
             Fishing Cooperatives          3,303
             Fishing Boats               308,161
 Source:  1990 Fishing Port Guide Book, published by the National Fishing
 Port Association (Zenkoku Gyoko Kyokai)
 "Unattended" Boats
 It was mentioned earlier that Japan's 378 marinas can "officially"
 accommodate around 50,000 boats, and it was also mentioned that there are
 around 275,000 recreational boats in Japan.  The natural question which
 arises is "Where are the other 225,000 boats?"  Table G provides the
 official explanation of where Japan's boats are kept and also presents the
 Ministry of Transport's boat storage goals for the year 2000.
 The "other storage" category in Table G refers to boats which are stored at
 home, etc.  Many inflatables, small dinghies, canoes and other small boats
 fall into this category.  The "unattended" category needs explanation.
 These boats are also termed "illegally moored boats" (fuho keiryu) but
 "extra-legal" rather than "illegal" might be the best description, for in
 many cases the boats apparantly do not violate laws per se but merely are
 moored by their owners in harbors, rivers and coastal areas administered by
 government agencies where boat mooring is not authorized but where it is
 also not forbidden.  These rivers and other locations have thus become
 unofficial marinas, and boat dealers will assist prospective boat buyers in
 locating a mooring spot in a nearby river.  Some boat dealers even collect
 regular fees from boat owners to watch over their boats.  The estimate of
 120,000 "unattended" boats is the official estimate but whether this is at
 all accurate is impossible to determine.
                                TABLE G
                   Boat Storage Arrangements in Japan
 Storage               Estimate for        Goal for        Increase or
 Location                  1987              2000             Decrease
 Marinas                 49,000            180,000          +130,000
 (Public Marinas)        (8,000)           (60,000)         +(52,000)
 Pleasure Boat Spots        --              60,000           +60,000
 Land-Stored Boats          --              90,000           +90,000
 Other Storage            79,000            70,000            -9,000
 Unattended Boats        120,000              --            -120,000
       TOTALS            248,000           400,000          +150,000
 Source:  Ports and Harbors Bureau, Ministry of Transport, September, 1988
 Government authorities are not happy with the unattended boat situation, but
 appear to have accepted that they can do little about it.  The Ports and
 Harbors Bureau complains that such boats cause problems for the management
 and use of ports and rivers, but the problem has grown too big to be solved
 by any enforcement measures.  The boats simply have nowhere else to go and
 the government itself would be criticized for not doing anything to provide
 alternative facilities for these boats should they attempt to forbid boat
 owners to use these areas.  So the boat dealers continue to sell boats to
 consumers and the latter continue to place them in Japan's rivers and
 canals.  Dealers and owners know where they can put boats where they will be
 left alone, and where they cannot.  Reportedly, warnings are occasionally
 issued to some boat owners but the authorities involved seem to take no
 other measures as long as the boats are causing no great harm.
 New Marina Development
 One of the major themes in Japan the past five or so years has been the
 necessity to increase domestic investment and demand as a way to increase
 imports and reduce Japan's huge trade surplus with the rest of the world.
 This has been the oft-repeated demand of Japan's trading partners, and, at
 the same time, many in Japan have called for programs which will improve
 living standards for the Japanese people who have worked hard over the years
 to create Japan's successful economy.  These pressures from at home and
 abroad have resulted in a wide variety of measures over the past several
 years which should slowly alter the orientation of the Japanese economy
 towards more consumption, a higher standard of living, increased imports,
 and more leisure time and opportunities.
 Marine recreation has been singled out as one of the most important areas of
 emmphasis, and a variety of programs have been established to develop this
 area.  One important way in which this has been promoted is the so-called
 "Resort Law," which is the nickname for legislation that was passed in May,
 1987 to promote the development of resorts throughout Japan.  This law
 established special resort districts in every prefecture of the country so
 as to meet the present and future expected demand for resort development.
 Under this program, districts applied to the government to be designated as
 resort areas, which entitles them to tax incentives, low interest loans and
 accelerated public works assistance.  Nearly all of Japan's 47 prefectures
 have submitted applications for government resort area designation, and a
 large number of construction projects are under way.  While not all of these
 are marine resorts, a large number are, and over time these resorts will
 provide added opportunities for boating and create demand for marine
 The Ministry of Transport has been at the forefront of a number of plans to
 reinvigorate Japan's waterfront, and in 1985 it drew up a plan called "Ports
 and Harbors for the Twenty-First Century," under which a wide variety of
 goals and plans for improving and upgrading Japan's ports and harbors to
 make them more suitable for recreational usage were proposed.  In September,
 1988 the Ministry drew up a plan for upgrading Japan's marinas under which
 concrete goals for increasing the number of marinas and other facilities
 were advanced.  The most important element in the plan is to increase the
 number of pleasure boat berths in Japan to 400,000 by the turn of the
 century and to eliminate all unattended boats.  This plan is called the
 Marine Ninty-Nine Program.  Table G provides the details of the MOT plan.
 Under this plan, the MOT will undertake a number of steps to improve the
 marina situation.  In addition to continuing certain ongoing upgrading
 programs for public marinas, the Ministry is already proceeding with new
 marinas in 33 ports around Japan, and, to deal with the unattended boat
 problem, it is creating in 32 ports simple boat mooring facilities (called
 "pleasure boat spots").  Further, it will select additional ports which will
 be designated as important marine recreation areas and they will then be
 entitled to receive public works assistance.  The government will also
 provide interest free loans and other subsidies to private developers and
 public/private projects to develop new marinas.
 The Ministry's plan involves the construction of approximately 140 new
 public marinas, including 20 large-scale marinas which can accommodate over
 1,000 boats, another 40 medium size marinas which can handle 500-1,000 boats
 each, and another 40 smaller marinas which can accommodate around 100-150
 boats each.  On the private side, they envision another 270 new marinas
 which would bring the number of private marinas to around 600.  Considering
 the trends toward larger cruisers which have greater cruising ranges, the
 Ministry has a plan to place a series of "base marinas" more or less equal
 distances apart around the coast of Japan.   The MOT plans 800 "pleasure
 boat spots" by the end of the decade.  It seems very likely that some of
 today's "unattended boat" parking areas will be turned into tomorrow's
 "pleasure boat spots."
 The other important element of the MOT's Marine '99 plan is a system  for
 storing boats on land when not in use and transporting them to the water on
 special vehicles when the owners wish to use them.  The MOT is planning that
 by the year 2000, some 90,000 boats will be stored according to this "Hello
 My Boat" plan.  The Ministry conducted a feasibility study in 1987 and in
 the fall of 1988 private companies conducted experiments which determined
 the practicality of the plan.  In 1989 the Japan Boat Development Center was
 established with the help of 70 private companies to put the plan into
 operation.  In April, 1990 a model operation began at a Kawasaki Steel plant
 site in Chiba Prefecture near Tokyo.  Unfortunately, the early stages of the
 operation have not gone well, and the organizers are restudying the matter.
 There is considerable skepticism in Japan about whether the ambitious plans
 of the MOT can be achieved.  Constructing new marinas has become a difficult
 proposition in any country, and it can only be even more difficult in Japan
 with its scarce and expensive land and its complex bureaucracy.  And the
 fishing cooperatives are a powerful force with well-recognized rights to the
 most attractive ports and waters.
 But there are some reasons to be optimistic.  Perhaps the main one is that
 the demographics of the fishing industry suggest that it will not always
 wield the monopoly over some of Japan's best ports and harbors that it
 presently does.  The fact is that the numbers of commercial fishermen in
 Japan are declining at a fairly rapid pace.  In 1980 there were some 457,400
 individuals employed in the industry, but by 1988 this had declined to
 Prospects are that the number will continue to decline.  According to data
 from the Ministry of Agriculture, Forestry, and Fisheries, 23.3% of all
 fishermen in 1988 were over the age of 60, while another 49.6% were between
 the ages of 40 and 60.  A career as a fisherman is not a very attractive
 prospect for a young Japanese today.
 There have already been a number of cases where fishing cooperatives have
 accepted partial ownership in marinas in exchange for giving up their
 rights, or a portion of their rights, to certain harbors and waters, and
 both the MOT and the MAFF are encouraging more cooperation between the
 industry and developers.  A career in the marina business may seem
 considerably more attractive to the children of a fisherman than a career on
 a fishing boat, and this could be a way to keep some of the younger people
 in Japan's fishing villages.  The cynical view is that the fishermen are
 merely holding out for large monetary payments, for, as mentioned earlier,
 certain cooperatives have have been very successful at doing this in the
 past.  But there are limits and there is a growing view that the waters
 belong to everyone, not only the fishermen.
 In view of the government's support and growing public demand for more
 leisure facilities, it seems safe to conclude that the number of marinas and
 boat mooring facilities will continue to grow steadily over the next ten
 years.  Unfortunately, many of the new facilities will not be built where
 they are most needed - in the Tokyo area - but in the rest of Japan where it
 will probably become easier to find a place to keep a boat.  Tokyoites will
 continue to have a unattractive choices and high costs for storing their
 boats.  One task will be to find other solutions to answer the demand of
 people living in the capital for boating activities.  This might be in the
 form of  charters or joint-ownership at other locations in Japan,
 time-sharing, or other solutions.
 Boat Operators License System
 The Ministry of Transport requires that an operator's license be obtained in
 order to operate all boats with the exception of small dinghies and rowboats
 without motors.  There is a rather complicated system of five license
 classes, but most pleasure boaters obtain either a Fourth Class license or a
 First Class license.  A Fourth Class license may be used for boats weighing
 less than 5 metric tons.  Further, the Fourth Class licensee may not take
 his boat beyond certain calm water areas or farther than 5 nautical miles
 offshore.  For boats weighing more than 5 tons but less than 20 tons, a
 First Class operator's license is required.  This license permits boat
 operation up to 100 nautical miles.  To go beyond this limit, it is required
 that a licensed engineer be on board.  The parameters of these two license
 classes determine how quite a few boats are designed an marketed in Japan,
 for manufacturers are anxious that Fourth Class licensees owners can operate
 boats in the thirty-foot range, while at the upper end of the First Class
 license range boatmakers are careful that they do not produce a boat that
 requires a commercial pilot to operate.
 Both licenses require physical examinations, written tests, and boat
 handling tests.  Most Japanese attend one of a number of dozens of such
 schools which offer boat license courses.  For the Fourth Class license,
 typically, there are 15 hours of classroom time for the written test and
 then another 12 hours of classroom time to prepare for the boat handling
 test.  For the First Class license, the respective figures are 40 hours and
 20 hours.  The costs of taking these courses run around Yen 100,000 ($740)
 for the Fourth Class course, and Yen 150,000 to Yen 200,000 ($1,111 - $1480)
 for the First Class course.  Licenses are good for five years and may be
 renewed.  Most boating schools also offer "boat license loans" so that
 students can pay for their courses on an installment plan.
 Many Japanese in the industry - although not the boat license schools -
 complain that the license system is too strict and limits the number of
 people who will be attracted to boating.
 End User Profile
 There are a number of fairly distinct market segments in the Japanese
 recreational boating market.  While the market may be well behind that of
 the U.S., it is nevertheless large and mature enough to have been divided
 into various segments for many years.  Thus, in terms of market segments,
 the Japanese market is not too different from that of the U.S. in most
 One important difference between the Japanese market and the U.S. market is
 that there is very little boat trailering in Japan.  In the U.S. there were
 5.9 million boat trailers owned in 1989, according to NMMA figures.  This
 corresponds to one-third of the number of boats in the U.S.  In Japan, the
 market is so small that the JBIA does not measure it.  The reasons are
 understandable.  First, most Japanese have small houses on small lots.
 Often there is no place for a car, let alone a boat trailer.  Second, boat
 trailer registration is expensive and the weight limit that a passenger car
 may tow is 750 kilograms including the trailer.  Third, roads, especally in
 residential areas, are narrow and it would be impossible to navigate in many
 neighborhoods with a trailer.  Finally, there are few boat launching ramps
 and few places to park a car with attached trailer while using the boat.
 These points apply to Japan's urban areas; the situation is different in the
 countryside and boat trailers are likely to become more common in the
 future.  There is a Japanese importer handling EZ Loader Trailers who has
 developed a small dealer network and who advertises in the boat magazines,
 but the market is so far very small.
 In March, 1991, Kazi Company, Ltd., Japan's largest marine publisher and the
 company which produces the monthly boating magazine Kazi, published the
 results of an extensive boat user survey of Kazi Magazine readers conducted
 in October, 1990.   The company received 4,573 responses so the sample is
 reasonably large.  The types of boats used by survey respondents were as
              Sailboats                   Motorboats
        Sailing Dinghies  34.4%       Runabouts            12.0%
        Sailing Cruisers  60.7%       Motorcruisers        54.0%
        Sailboards         4.9%       Small Fishing Boats  23.3%
                                      Personal Watercraft  14.3
 The profile of the users of the above boat categories based upon the
 responses to the Kazi survey are presented below.
 Sailing Dinghies
 Average Age                  35.9 years
 Average Salary               Yen 6.0 million ($44,444)
 % Own own boat               42.4%
 Average boat length          4.1 meters
 Average annual upkeep        Yen 170,000  ($1,260)
 Average purchase price       Yen 526,000  ($3,896)
 Sailing cruisers
 Average Age                  43.3
 Average Salary               Yen 7.5 Million ($55,555)
 % Own own boat               75.0%
 Average boat length          8.2 meters
 Average annual upkeep        Yen 503,000 ($3,726)
 Average purchase Price       Yen 6,913,000 ($51,207)
 Average age                  44.2
 Average Salary               Yen 6.7 Million ($49,630)
 % Own own boat               47.1%
 Average boat length          5.1 meters
 Average annual upkeep        Yen 310,000 ($2,296)
 Average purchase price       Yen 1,800,000 ($13,333)
 Average age                  37.2
 Average salary               Yen 9.4 million ($69,630)
 % Own own boat               66.4%
 Average boat length          7.5 meters
 Average annual upkeep        Yen 953,000 ($7,059)
 Average purchase price       Yen 9,084,000 ($67,289)
 Small fishing boats
 Average age                  38.3
 Average salary               Yen 6.3 million ($46,666)
 % Own own boat               37.3%
 Average boat length          5.6 meters
 Average annual upkeep        Yen 305,000 ($2,259)
 Average purchase price       Yen 1,843,000 ($13,651)
 Personal watercraft
 Average age                  34.5
 Average salary               Yen 7.2 million ($53,333)
 % Own own boat               12.7%
 Average boat length          --
 Average annual upkeep        --
 Average purchase price       --
 Note:  Dollar figures calculated at $1 = Yen 135.
 Some of the other results of the Kazi survey are very interesting and shed
 some light on the profile of Japanese boaters.
 Average age & sex     37.8 years, 98% male
 Residence             Tokyo area, 36.3%, Osaka area 29.4%
 Occupation            Company employees,  47.5%;  Company executives 14.6%;
                       self-employeed, 14.6%; government employee, 11.6%:
                       professionals, 4.7%.
 Average salary        Yen 7.3 million ($54,000)
 Car Ownership         92% (15% foreign cars)
 Residence             Own single-family house, 44.9%; own
 apartment,                         8.7%; rent house or apartment, 19.7%.
 Boating purposes      Cruising, 79.9%; racing, 39.6%; fishing, 29.6%; high
                       speed boating, 12.0%; waterskiing and diving, 11.5%;
                       trawling, 10.2%; sleeping aboard, 7.0%; entertaining
                       guests, 5.5%.
 Boat ownership        Individual, 61.5%; group ownership, 31.6%; crew,
                       16.9%; club member, 11.5%.
 Domestic boat price   Yen 4.5 million ($33,333)
 Import boat price     Yen 13,009,000 ($96,363)
 Engine type           Outboard, 36.5%; I/O gasoline, 7.9%; I/O diesel,
                       11.1%; inboard diesel, 41.6%; inboard gasoline
 Engine horsepower     Below 10, 42.8%; 10-30, 24.0%; 30-100, 13.8%; 100-200,
                       11.2%; 200-400, 6.9%; over 400, 1.2%.
 Average boating       23.1 days per year
 Pct owning second     36% (45% of which are sailing dingies) boat
 Respondents were asked about their plans for buying boats in the future.
 Fully 67.8% responded that they planned to buy a boat over the next five
 years.  32.7% of these hoped to buy a boat 8-10 meters in length, 16.5%
 hoped to buy a boat 10-12 meters in length, and 6.3% desire to buy a boat
 12-15 meters long.  Around half expected to buy a second-hand boat, while
 the remainder planned to buy new boats.  Most were looking to buy a larger
 version of the same type of boat they currently use.
 In Table A we assigned a score of "4" to end-user receptivity to
 American-made recreational sailboats and a score of "5" to end-user
 receptivity to American-made power boats, meaning that we judge that
 Japanese consumers are very receptive to American-made sailboats and
 extremely receptive to American-made powerboats.  Our rationale is explained
 American sailboats are generally seen by Japanese sailers, dealers,
 manufacturers and other knowledgeable industry specialists as being of good
 design and of better quality than locally produced Japanese sailboats.  Many
 Japanese sailers start out with an inexpensive Yamaha sailboat and then in a
 few years upgrade to a larger foreign-made sailboat.  There are very few
 locally produced sailboats in Japan above 10 meters, so those who want to
 own a bigger boat have little choice but to look at a foreign-made boat.
 Yet American-made sailboats are generally ranked below European sailboats in
 Japan.  They are seen as being generally less well-made, having more
 problems with leaks and quality, and as having interiors which are less
 attractive and sophisticated.  Also, interior workmanship is often
 criticized.  Some Americn sailboats have had many problems in the Japanese
 market, and this has hurt the reputation of all American boats.  In general,
 U.S. East Coast sailboat manufacturers are seen as having superior products
 best suited to the rough Japanese seas.  Additional information on the
 competitive position of American sailboats is presented below.
 Japanese consumers are extremely receptive to American powerboats.  The
 American powerboat industry is seen as being the world's leader, making many
 models and types which are available nowhere else.  America is seen as being
 the land of leisure, and American powerboats seem to typify this image.
 American powerboats have been dominant in the high end of the Japanese
 market for some years.  Japanese boating magazines are full of pictures and
 articles about Americana powerboats in which the boats are analyzed and
 discussed in great detail.  In terms of price, American boats are very
 competitive, as many American companies can produce in large volume.  As in
 the case of sailboats, Japanese will often start out with a small
 domestically-produced powerboat and upgrade to an American powerboat at a
 later date.  Additional information on the competitive position of American
 powerboats in the Japanese market is presented below.
 We think that there are good sales prospects in nearly every category of
 boat with the exceptions of sailing dinghies and small rowboats.  American
 and European companies are successfully marketing an extremely wide variety
 of boats in Japan, whether they be small inflatables or large luxury
 cruisers.  Anything which is of exceptional quality or unique design has a
 very good chance of being successful in Japan.  On the other hand, products
 of poor or uneven quality are unlikely to succeed, no matter what their
 price.  But a product does not have to be absolutely top quality to succeed
 in Japan.  A number of low price point products are very successful in
 Japan.  The main characteristic they share is appropriate pricing and
 consistently good quality control.  As the Japanese market continues to grow
 and more middle class consumers are attracted, the growth will be seen in
 the moderately-priced products rather than the luxury class items.
 We think the following products will be in especially high demand over the
 next two or three years:
 *sailboats over 30 feet
 *sportsfishing boats over 20 feet
 *outboard sports boats over 18 feet
 *luxury cruisers over 30 feet
 *high performance boats 20-30 feet
                              PART III
 Japanese Boat Production
 According to figures produced by the Japan Boating Industry Association
 (JBIA), in 1989 36 Japanese boat manufacturers produced 22,920 motorboats
 valued at Yen 21.1 billion ($156 million).  This was an increase of 12.3% in
 production and 41.3% in value over 1988.  Of these 22,920 boats, 63%
 (14,470) were inflatables, with most of the remainder FRP.  Of the
 inflatables, 71% were exported, mostly to the U.S. and Europe.  Table H
 below provides details on domestic motorboat production.  Table 9 at the end
 of this report provides JBIA statistics on Japanese pleasure boat shipments
 by major boat type for 1987-1989 as well as our estimates for 1990 and
 1991.  Tables A and B on pages 4 and 5 provide our estimates of the size of
 the overall Japanese market for recreational boats.
                            TABLE H
                Japanese Motorboat Production by Length
                          and Material, 1989
     Boat Length    FRP   Rubber    Poly-   Aluminum   Wood   Total
     (Meters)                     ethylene
     Below 3        385    2,555     525                      3,465
     3-4            634    9,910               15       25    10,584
     4-5            560    1,955                              2,515
     5-6            591       50               16               657
     6-7          2,199                                       2,199
     7-8          2,993                                       2,993
     8-9            224                                         224
     9-10           100                                         100
     10-11          123                                         123
     11-12           15                                          15
     Over 12         45                                          45
     TOTALS       7,869   14,470     525       31       25   22,920
 Source:  Japan Boating Industry Association
 Although inflatables accounted for 63% of unit production, we estimate that
 they accounted for only around 7% of shipment value, or around Yen 1.4
 billion.  Excluding inflatables, we estimate that FRP and other motorboat
 shipments were valued at around Yen 19.7 billion ($146 million).  The more
 rapid increase in 1989 shipment value compared with production appears
 related to increased production of larger and more expensive boats.  Table I
 shows recent trends in unit production and shipment value.
                              TABLE I
              Japanese Motorboat Production and Shipments,
       Year        Production       Pct         Shipments     Pct
                    (units)      Increase       (Yen 000)   Increase
       1985         20,261         -0.6         8,418,068     -19.7
       1986         19,196         -5.3         8,458,298      +0.5
       1987         19,667         +2.5         9,976,221     +17.9
       1988         20,406         +3.8        14,947,009     +49.9
       1989         22,920        +12.3        21,122,346     +41.3
 Source:  Japan Boating Industry Association
 Of 8,450 non-inflatable powerboats produced in 1989, approximately 48% were
 of the cabin type.  This is a change from pre-1988 years, when the
 production of cabin-type motorboats had outnumbered open-type motorboats.
 In 1988 the numbers were nearly the same, and in 1989 production of
 open-type motorboats exceeded cabin-types by 300 units.  Of 8,450
 non-inflatable motorboats, only 500 were longer than eight meters and only
 183 exceeded 10 meters in length.  Table J provides breakdowns by size and
 Sailboat shipments in 1989 totaled Yen 2.9 billion, with production at 1,621
 units.  72% of sailboat unit production was of sailing dinghies less than
 five meters in length.  The remaining 451 boats were sailboats with cabins.
 These accounted for around 28% of sailboat production, up eight percentage
 points from 1988.  80% of cabin-type sailboats were between seven and nine
 meters.  Only 22 sailboats produced in Japan were more than ten meters in
 length.  All but two sailboats were constructed of FRP.  Table K provides
 sailboat production data for 1989.
 Sailboat production has been falling in Japan over the past several years,
 with volume falling more rapidly than shipment value, indicating that the
 per-unit value has been rising.  The largest decline in 1989 production was
 in the 4-5 meter length sailing dinghy class, indicative of a trend away
 from smaller sailboats.  Since 1985, the average length of a
 domestically-produced sailboat has risen from 5.0 meters to 5.7 meters in
 1989.  The JBIA reports that increases in
                                TABLE J
             1989 Japanese Motorboat Production by Boat Type
     Boat Length  Boats With    Boats Without   Inflatables   Total
      (Meters)      Cabins          Cabins
     Below 3                         910           2,555      3,465
     3-4                             674           9,910     10,584
     4-5             279             281           1,955      2,515
     5-6             242             365              50        657
     6-7           1,192           1,007                      2,199
     7-8           1,855           1,138                      2,993
     8-9             224                                        224
     9-10            100                                        100
     10-11           123                                        123
     11-12            15                                         15
     Over 12          45                                         45
     TOTALS        4,075           4,375          14,470     22,920
 Source:  Japan Boating Industry Association
                             TABLE K
            1989 Japanese Sailboat Production by Boat Type
 Boat Length     Sailboats With      Sailing          Total
  (Meters)            Cabins         Dinghies
   Below 3                             193             193
   3-4                                 208             208
   4-5                                 766             766
   5-6                  6                3               9
   6-7                  3                                3
   7-8                242                              242
   8-9                117                              117
   9-10                61                               61
   10-11               14                               14
   11-12                6                                6
   Over 12              2                                2
     TOTALS                451            1.170           1,621
 Source:  Japan Boating Industry Association
 the 7-8 meter sailboat category are also helping to raise the average
 length.  Table L shows the trends in unit production and shipment value from
 1985 to 1989.
                              TABLE L
              Japanese Sailboat Production and Shipments,
       Year        Production       Pct         Shipments     Pct
                    (units)      Increase       (Yen 000)   Increase
       1985          2,119        -29.5         2,634,884      -4.0
       1986          1,938         -8.5         2,585,590      -1.9
       1987          1,887         -2.6         2,471,433      -4.4
       1988          1,861         -1.4         3,011,290     +21.8
       1989          1,621        -12.9         2,862,704      -4.9
 Source:  Japan Boating Industry Association
 Another category of pleasure boats produced in Japan are collectively termed
 "rowboats" and includes boats with oars, pedalboats, canoes and the like.
 These account for around 5% 1989 domestic shipments by  value.  Table 9
 provides figures for 1987-89.  40,696 rowboats were produced in 1989, of
 which 85% were rubber inflatables, mostly between two and three meters in
 length.  Table M shows unit production and shipment value from 1985 to 1989.
 Personal watercraft (jet skis or water scooters) shipment values for 1987-89
 are shown in Table 9 at the end of this report.  This is a fairly new market
 in Japan but it has been a major product area for two Japanese companies,
 Yamaha and Kawasaki, for some years.   When these products were first
 developed in the 1970's, the major market developed in the United States and
 Kawasaki began building its "Jet Skis" in the U.S.  Yamaha also entered the
 personal watercraft market but by exporting from Japan until it started
 local production in the U.S. in 1989.  When the Japanese market began to
 develop in the mid-1980s, Yamaha could supply it from its plant in Japan and
 Kawasaki began exporting to Japan from its U.S. plant.
 According to JBIA data, production of personal watercraft in Japan amounted
 to 19,019 units in 1987, 39,487 units in 1988, and 40,409 in 1989.  Since
 Kawasaki does not produce personal watercraft in Japan, presumably this
 production is nearly all Yamaha's.
 Table 9 provides our estimates for domestic shipments for 1990 and 1991.  We
 expect a decline in total production in 1991 due to a further shift in
 offshore production of personal watercraft.  However, we estimate that in
 1992, domestic production will increase again, so that for the next three
 years we are estimating average growth of 5% for domesstic production.  See
 pages 4 and 5 for our estimates.
                              TABLE M
              Japanese Rowboat Production and Shipments,
       Year        Production       Pct         Shipments     Pct
                    (units)      Increase       (Yen 000)   Increase
       1985         43,279        +10.5         1,946,557      -3.2
       1986         41,464         -4.2         3,094,299     +58.9
       1987         37,208        -10.3         1,862,278     -39.8
       1988         24,223        -34.9         1,609,767     -13.6
       1989         40,696        +68.0         1,874,867     +16.5
 Source:  Japan Boating Industry Association
 Domestic Exports
 Exports of Japanese pleasure boats from 1988 to 1990 are shown in Table 10.
 Because of the introduction of the harmonized system (HS) of tariff codes in
 1988, the export figures for 1987 and 1986 are not on the same base, but
 they are shown in parentheses in Table 8.  Presumably the totals are
 comparable.  It may be seen that exports in all categories are declining.
 Obviously the rise in the value of the yen has hurt the competitiveness of
 many Japanese boats.  Exports of powerboats and sailboats have nearly
 disappeared (most of those that remain are being exported to the
 Asia/Pacific region), inflatables are declining gradually, and the category
 "Other Pleasure Boats" is declining steadily after increasing sharply in
 1987 and 1988.  We think that this category is primarily personal watercraft
 and the decline seemed to coincide with the Yamaha's commencement of local
 production in the U.S.   Engines and drive trains are still being exported
 from Japan for assembly with U.S.-produced hulls, but these exports would
 show up in other HS categories.
 Perhaps 80% of Japan's boat exports are accounted for by Achilles, the large
 inflatable producer, and Yamaha, the large personal watercraft producer.
 For the above reasons, we estimate that total Japanese pleasure boat exports
 will continue to decline by 15% per annum over the next three years.  See
 Tables A and B on pages 4 and 5.
 The Japanese Boat Manufacturers
 As mentioned earlier, some 36 Japanese boat manufacturers took part in the
 JBIA's 1989 survey.  While there seem to be a few manufacturers which were
 not included, they are very small companies.  In fact, most of the
 participants in the JBIA survey themselves are small as well.  Japan really
 has only one manufacturer which dominates the boatbuilding industry.  That
 company is the Yamaha Motor Company.
 The Yamaha Motor Co., Ltd. in 1955 was spun off from its then parent, Nippon
 Gakki, which is now known as Yamaha Corporation, the world's largest musical
 instrument manufacturer.  Today, Yamaha Motor is a publicly listed company
 but it is still part of the Yamaha group, with Yamaha Corporation owning 33%
 of its outstanding stock.
 Yamaha Motor (below "Yamaha") began its independent existence as a
 motorcycle maker but over the years diversified into a wide variety of
 mainly leisure products.  Today, in addition to marine products, the company
 makes automobile engines, snow-mobiles, generators, golf cars, diesel
 engines, all-terrain vehicles, and many other products.  For the year to
 March, 1990, parent company net sales amounted to Yen 413 billion (over $3
 billion).  Consolidated sales were nearly Yen 600 billion ($4.4 billion).
 Marine division sales reached Yen 101 billion ($750 million) in the fiscal
 year to March, 1990.  This division produces outboard and inboard engines,
 all types of dinghies, motorcruisers, fishing boats and sailboats, personal
 watercraft, small and medium-size commercial fishing boats, Japanese-style
 boats, sightseeing boats, swimming pools, marine clothing, and other items.
 Exports amounted to 55% of this division's total sales, but export growth
 was flat in the year to March, 1990 while domestic sales increased by 21% to
 Yen 45.6 billion.
 During the six months to September, 1990, marine product sales grew by 19.7%
 over the year-earlier six month period.  During this period, domestic sales
 grew by 27.5%, reflecting the strong domestic market during 1990, and
 exports grew by 11.4%.
 In addition to its own boat manufacturing and sales activities, Yamaha is
 import agent for Trojan Yachts, Tiara Sportboats, Pursuit sportsfishing
 boats, Thunderbird Formula speed boats, and sailboats manufactured by the
 French company, Jeanneau.
 Yamaha also is engaged in marina operation and development and many boating
 industry educational and promotion activities.  It operates 230 boat license
 schools throughout Japan and many other schools to teach sailing,
 motorcruiser operation, sportfishing, personal watercraft operation, and
 other activities.  It also operates marine clubs and is opening a boat and
 yacht rental operation.
 Yamaha also sponsors a number of yacht races, the foremost of which is the
 Yamaha Osaka Cup, a sailboat race from Australia to Osaka, Japan.  In
 addition, the company organizes or co-sponsors a large number of races,
 cruises, jamborees, etc. all around Japan.  Yamaha helped to construct
 Japan's entry in the America's Cup race and is an official sponsor of the
 Since producing its first FRP boat in 1960, Yamaha has steadily built up its
 pleasure boat business to the point where it dominates the market in Japan
 for such boats under 10 meters.  Recently, as Japanese consumers have been
 showing great interest in larger cruisers and sailboats, Yamaha has begun to
 produce larger boats.  At the 1991 Tokyo International Boat Show, Yamaha
 introduced a new 60 foot luxury motorcruiser, a 50 foot motoryacht, a 51
 foot sportfishing motoryacht, a 38 foot sportfishing boat, and a 38 foot
 cabin cruiser.  In the sailboat area, the company brought out a 34 foot
 cruiser.  Thus, Yamaha is clearly aiming at the entire market, and shows no
 signs of leaving the high end of the market to foreign manufacturers.
 It is extremely difficult to estimate Yamaha's share of the domestic boat
 market.  It is often said in Japan that Yamaha has a market share of around
 50%, but it is very difficult to document this in view of the lack of public
 data.  In view of the fact that boat imports grew by over 500% between 1987
 and 1990, considerably more rapidly than domestic boat production, it seems
 likely that Yamaha's overall share has declined over this period.  We think
 that Yamaha's share in boats under 30 feet may be as high as 70%, but in
 boats above 30 feet their share is very likely less than 10%.
 Other Japanese Boat Manufacturers
 Achilles Corporation.  Japan's largest manufacturer of inflatable boats.  A
 high percent of sales are exported to the U.S.
 Nissan Marine.  This is the Marine division of Nissan Motor Co., Ltd.
 Nissan's involvement with the marine industry began when it entered the
 marine engine market in 1970.  In 1973 Nissan began to manufacture power
 boats and today has a full lineup of small and medium-size cruisers and
 fishing boats up to 27 feet, and the company has plans to bring out a 33
 footer.  Nissan also produces outboards and began exporting them in 1985.
 Inflatables are another product area the company has entered.  Nissan
 operates four marinas in Japan as well as boating schools.  Marine sales
 appear to be around one-fifth those of Yamaha.  Nissan manufactures two
 models of J-Boats (the J-24 and the J-29) in Japan under license from the
 American manufacturer, and imports Blackfin and Sport-craft boats.
 Yanmar Diesel.  This is another company that has taken its engine expertise
 and applied it to pleasure boats.  The company established a marine leisure
 sales division in mid-1988 and in early 1989 set up a separate pleasure boat
 sales company.  It manufactures a line of eight inexpensive fishing cruisers
 and runabouts, the largest of which is a 33 foot fishing cruiser with flying
 bridge.  The company also is a dealer for Bayliner cruisers, Ferritti boats
 from Italy, and Wetjets, personal watercraft from WetJet International of
 the U.S.
 Okumura Boat Co., Ltd.  Based in Hyogo Prefecture, the company claims to be
 the world's largest producer of Snipe sailing dinghies, having built a total
 of 3,500 of them since 1970.  The company also produces other sailing
 dinghies as well as a small number of 30 foot sailing cruisers.  In 1988
 Okumura began to market imported sailboats and to date has sold around 50
 boats.  Okumura has 20 employees.
 Okazaki Shipbuilding.  Produces 30 foot sailboats, a 33 foot motor sailer,
 and a 37 foot sloop.  Also imports Dutch Trintella sloops, and a number of
 other Northern European sloops and motor sailers.
 Mitsubishi Heavy Industry.  A newcomer to recreational boats, the company is
 presently marketing one 25 foot powerboat and two 28 foot cruisers with
 flying bridges.  The company also imports Westerly sailboats from the U.K.,
 Tresfjord powerboats from Norway,  Viking motorcruisers from the U.S., and
 luxury motorcruisers from White-water International of the U.K.
 New Japan Yacht Co., Ltd.  Based in Shizuoka, the company produces a range
 of sailboats from 18 feet up to 36.5 feet.  It also markets boat fittings
 and accessories.  The company runs color ads for its Mirabelle 375, a 36.5
 foot sailing cruiser, which emphasize that the boat is made in Japan and
 designed to be especially strong for the "special" conditions found in
 Japan's waters.  The company also produces a series it calls Libeccio which
 has an extremely deep cockpit for safety.
 Step Marine.  Produces 30-40 foot sailboats with center cockpit or pilot
 house.  Claims to have built 100 of these sailboats.  Also builds a 30 foot
 houseboat.  Located in Kanagawa Prefecture.
 Tsuboi Craft Co., Ltd.  A Nagoya-based manufacturer with 10 emmployees,
 Tsuboi produces two lines of racing-oriented cruising sailboats between 28
 and 33 feet.  The company strives to build high performance cruisers which
 fit Japanese consumer tastes.
 In addition to the above, there are at least another five or six small
 producers of sailboats, ten or so more other companies producing power
 boats, and at least 20 small manufacturers of sailing dinghies.  It may be
 seen that with the exception of eight or ten manufacturers, boatbuilding in
 Japan is not much more than a family enterprise at the present time.
 As may be seen in Tables A and B and in Table 4 at the end of this report,
 pleasure boat imports have been soaring over the past several years.  Total
 imports in 1990 amounted to Yen 52,620 million, an increase of 89% over
 1989.   Imports rose by 84% in 1989,  81% in 1988 and 130% in 1987.  Between
 1986 and 1990, imports increased by 14.5 times.  We estimate that in 1990,
 imports accounted for 59% of the total Japanese pleasure boating market.
 We think that there are a variety of reasons for this rapid expansion of
 1.  The rise in the value of the yen since 1985 has made foreign-made boats
 priced in yen much cheaper.
 2.  The elimination of heavy commodity taxes effective April, 1989 also
 permitted the domestic prices of imported boats to decline.   (See below.)
 3.  The Japanese economy has been growing rapidly during these years, giving
 consumers confidence to make large purchases.
 4.  Japanese have gradually been having more free time and are more
 interested in leisure activities.  This has attracted many new companies
 into leisure businesses, including the pleasure boating industry.  These
 companies have been agressively looking around the world for attractive
 products to bring into Japan.
 5.  The Japanese government's programs to promote imports may have provided
 a more positive environment for both importers and consumers.
 6.  The absence of a large thriving domestic industry, particularly in the
 market for larger boats, has meant that there has been no alternative
 domestic source.
 7.  Supplying the Japanese market for personal watercraft from its U.S.
 plant has allowed Kawasaki to make a contribution to Japan's imports.
 Outlook for Imports
 It is extremely difficult to forecast the future outlook for imports.  We
 think that over the long term, the Japanese market for recreational boating
 will continue to grow rapidly as Japan catches up (or at least partially
 catches up) with Western levels of marine recreation.  However, we think
 that it is unlikely that imports will continue to grow at the pace they have
 over the past five years, primarily because the absolute amount of imports
 has become so large but also because the past five years have been very
 unusual in terms of economic growth and currency fluctuations.  Further, the
 outlook for 1991 is somewhat negative because of slower economic growth in
 Japan and around the world.  We think that imports are likely to remain flat
 in 1991, or even decline somewhat from 1990's unusually high level.
 However, we think that growth can resume again in 1992 and 1993, so that for
 the three year period 1991-93 we are estimating average annual growth of
 around  7%.
 U.S. Imports
 Table 5 at the end of this report presents Japanese pleasure boat imports by
 country for 1988-90.  It may be seen that U.S. imports account for around
 half of all pleasure boat imports into Japan.  The percentage of American
 imports among total imports has remained more or less constant over this
 time.  We estimate that the  American share of the entire Japanese pleasure
 boating market was 28.6% in 1990, compared with 21.4% in 1988 and 22.3% in
 1989.  The factors behind U. S. import growth are the same as those listed
 above.  We expect that imports from the U.S. will grow the same as total
 imports over the next three years, or at an annual rate of 7%.
 Imports of American powerboats are slightly over half of all powerboat
 imports and, since this is the biggest market segment in Japan, are the main
 source of the U.S. import strength (see Table 7).  Imports of power boats
 from Italy account for 16% of powerboat imports, followed by those from
 Taiwan (10.9%), the United Kingdom (7.6%) and Sweden (5.7%).  In the
 category "Other boats for pleasure and sports use" (Table 8), imports from
 the United States constitute 84% of all imports.  We believe that over half
 of this category is personal watercraft manufactured by Kawasaki in the
 United States.  However, in sailboats, the American share of total Japanese
 imports is only 14.4%, which was second behind France, which had 28% of the
 total.  The United Kingdom is third, with 10.9%.  See Table 6.
 For reference, U.S. Department of Commerce statistics on American exports to
 Japan are provided in Tables 1-3, and Tables 13-15.  In general, the U.S.
 totals are close to the Japanese figures, but there are differences because
 the U.S. exports are broken down in six categories whereas the Japanese
 imports are divided only among four categories.  The figures would not be
 expected to track exactly due to differences in timing and because the
 Japanese import figures would reflect freight and insurance costs.
 The U.S. strength in the Japanese powerboat market, as compared with the
 sailboat market, seems to be related to the fact that vis-a-vis their
 European competitors, American boat manufacturers are relatively stronger in
 powerboats than they are in sailboats.  Over 95% of the huge U.S. $6.0
 billion market for pleasure boats is powerboats, so there are a large number
 of American powerboat manufacturers producing a huge variety of products at
 many different price points.  On the other hand, the European recreational
 boat market is much more of a sailboat market, and European sailboats are
 thought by Japanese sailers to be of generally better quality and design.
 Since Europeans are also much more accustomed to exporting and doing
 business in foreign markets than are American manufacturers, it may be that
 they have paid more attention to the Japanese market than have American
 sailboat makers, who have a huge market at home.
 American Suppliers
 Virtually all American motorboats and sailboats that are sold in the
 Japanese market are imported by Japanese agents and sold through Japanese
 distributors.  This seems to be true for European boats as well.  There do
 not appear to be any American boat manufacturers which have established
 their own subsidiaries or distribution.
 There are dozens of types of American boats being sold in the Japanese
 market.  There is no data available on market shares, but nearly all of the
 major American boat manufacturers have some kind of distribution in the
 Japanese market.  Particularly prominent American makes in Japan in
 powerboats are:  Albin, Bayliner, Bertram, Carver, Four Winns, Grady-White,
 Hatteras, Hinckley, Sea Ray, and Wellcraft.  In sailboats, Island Packet,
 J-Boats, Pearson and Sabre are prominent.
 Among non-American powerboats, Sweden's Storebro is very prominent in the
 luxury cruiser category.  The Italian-made Riva and Ferretti are also
 well-known, as is Australia's Precision Yachts.  President Yachts from
 Taiwan is also prominent.  In the sailboat category, Beneteau is the
 dominant company, while  other well-known brands in Japan are Jeanneau and
 Gib'sea from France, Contest and Winner from Holland, and Hans Christian and
 Westerly from the U.K.
 The Japanese pleasure boating market is sufficiently diverse that there is
 no one formula for success.  There are many niches, many different price
 points, and many approaches.  The following are some general comments on
 important factors for succeeding in the market.
 In the high end of the market, whether for powerboats or for sailboats,
 price is less important than quality and service.  Buyers of luxury yachts
 in Japan are the very wealthy or corporations who will have their boat
 serviced and cared for by a marina providing all services.  In this market,
 manufacturer's reputation, past performance, dealer reputation, and service
 system will be most important.  Owners will demand the very best quality,
 particularly for the interior.  Owners will expect that their boats will
 never leak from Japan's frequent and heavy rains.  They will expect the
 interior woodwork to be perfect.  In general, yachts which have had the best
 reputation abroad and which have a Japanese dealer with good connections and
 reputation will be the most successful.  Many Japanese industry sources
 indicate that European firms have the best record of providing the kind of
 quality and service expected in this market segment.  Initial selling price
 is high in Japan because the dealer will have to look after the boats he
 sells for a long time.
 Price is much more important in the middle and lower part of the market, of
 course, but reputation, quality, dealer and service are still very
 important.  The most successful companies in Japan are those which are able
 to incorporate changes which their Japanese dealers request, and which are
 able to respond immediately when there are problems.  But the Japanese often
 point out that their approach to manufacturing is to make sure there are no
 problems to begin with, not just to be good at fixing problems after they
 occur.  Thus, quality control on products sent to Japan is extremely
 important.  Once products or companies get bad reputations in Japan, it is
 extremely difficult to get a second chance.
 A manufacturer aiming at any kind of volume sales in Japan needs an agent
 who can create a nationwide dealer network.  Japanese language promotional
 materials must be prepared and regular advertising in the appropriate
 magazines is necessary.   Depending on the type of product, an agent with
 connections to or relations with marinas might be important.  After-sales
 service must be available.  Japanese consumers are very conscious of a
 company's name and reputation.  Buying a product like a boat is like joining
 a club in Japan, and people do not want to join a club with a bad
 reputation, even if it is cheap.
 The universal advice from Japanese industry sources and successful foreign
 firms in Japan is to do your homework before you act and make sure that you
 are tying up with the right company before making any commitments.  Most
 foreign firms with relationships in Japan are being represented by a
 Japanese dealer who approached the foreign company and asked to represent
 them in Japan.  In most cases, the foreign company agreed and a relationship
 was launched.  Some relationships worked out well and some did not.  In many
 cases, a better agent could have been found if the foreign manufacturer had
 taken the time to learn about the market and looked around for a more
 suitable agent.  One problem today is that there are already many tie-ups,
 and so a newcomer may have to look harder.
 Additional information on the distribution  system is presented below in the
 section on distribution and business practices.
 Import Climate
 There are no longer tariffs on pleasure boats imported into Japan.
 Commodity taxes ranging from 15% to 30% on imported boats that existed in
 the past were eliminated in 1989.   There are no quotas or other
 restrictions.  There is a three-percent consumption tax which is levied on
 all transactions in Japan.
 Japan maintains some rather onerous inspection requirements which must be
 met before boats may be registered in Japan.  While the standards apply to
 Japanese manufacturers as well as foreign manufacturers, the requirements
 are well known to the Japanese companies and are taken into account when
 boats are designed for use in Japan.  In addition, there is a system of
 inspection at the time of manufacture which foreign manufacturers who wish
 to take advantage of it can use.
 Most foreign-made boats, however, are not designed with these standards in
 mind, so when they are first brought into Japan, they must go through a
 time-consuming and expensive process of being inspected.  The authorities
 require detailed drawings and physically inspect hulls, engines, propeller
 shafts, fuel tanks, navigation lights, etc.  They also have standards for
 buoyancy and stability.  In the past, there have most often been problems
 with propeller shafts and fuel tanks, according to Japanese officials
 involved in the inspection process.   Boats with commonly used materials and
 engines seem to have the least problems.  But when the Japanese authorities
 see something new - a different construction material or a new design - they
 will not know how to cope with it, and it can be a big problem.
 Boats measuring less than 12 meters in length are inspected by an
 organization called the Japan Craft Inspection Organization, which is an
 official inspection organization authorized to inspect smaller boats on
 behalf of the government.  Boats over 12 meters are inspected by the same
 Ministry of Transport inspectors who inspect large freighters and tankers.
 This latter inspection system is termed the "JG" (for Japanese Government)
 inspection, whereas the former system is called "JCI" inspection.
 There is a procedure for having certain key parts of the inspection done in
 the manufacturer's plant in the United States.  "Letters of Compliance" can
 be issued which will shorten the JCI inspection in Japan.  These local
 inspections are handled by a Japanese organization called the Nihon Kaiji
 Kyokai, which has offices in several cities in the United States.
 In March, 1991 the Ministry of Transport published a 421-page book entitled
 "Handbook For Those Who Intend To Export Boats To Japan."  which outlines
 the relevant laws, regulations, rules and notices which relate to pleasure
 boat import procedures and inspections in Japan.  This handbook is a very
 useful guide to any company presently exporting to Japan or interested in
 doing so in the future.  Much trouble can be averted by knowing in advance
 the standards which must be met in order to have boats registered in Japan.
 This book can be obtained from the JCI or the Ministry of Transport at the
 addresses shown later in this report, or from the Ship Machinery Department
 of the Japan External Trade Relations Organization (JETRO) New York office,
 located at 44th Floor, McGraw-Hill Building, 1221 Avenue of The Americas,
 New York, NY 10020-1060, telephone (212) 997-0400.
 Distribution and Business Practices
 As mentioned, most if not all American boats sold in Japan are handled by
 local Japanese agents.  These agents fall into a number of categories.
 1.  Specialized Importers.  Mostly small operations, these companies sell a
 limited range of specialized products to a fairly narrow group of
 experienced boaters.  Sometimes they succeed in developing a large number of
 dealers, but frequently they have only one or two tiny offices.  The
 distribution of sailboats is dominated by companies in this category.  They
 are often run by an experienced boater who has turned his hobby into a
 business.  They mostly sell to people who own a Yamaha sailboat and who wish
 to upgrade to something more sophisticated.  These agents rely on their
 detailed product and customer knowledge, and their personal connections with
 marinas and others in the industry to succeed.  Examples of companies in
 this category are Ocean First Marine, 135 Degrees East, and Fusion, Inc.
 There are perhaps 50-75 companies in this category.
 2.  Boat and Engine Manufacturers.  All of the large Japanese boat
 manufacturers and many of the smaller ones also act as import agents for
 larger foreign boats.  The same is true of the engine manufacturers such as
 Komatsu Diesel and Yanmar.  There are a number of benefits for these
 companies.  It allows them to take advantage of the growth in a market
 segment where they do not have any of their own production.  It allows them
 to utilize their existing sales channels for more products.  It helps their
 sales force become more knowledgeable.  Perhaps most important, it allows
 them to learn from the foreign companies whose products they are handling.
 For example, Yamaha handles Jeanneau sailboats, and this helps Yamaha in its
 own sailboat manufacturing.  By handling Pursuit fishing cruisers, Yamaha
 also picks up important experience in this segment.  From the standpoint of
 the foreign manufacturer, having a large Japanese manufacturer as an
 important agent means having an instant network of sales and service, but
 the foreign product is just one of many products handled and the sales staff
 is not likely to be very knowledgeable about the product.  Also, the foreign
 maker needs to consider whether the manufacturer will eventually begin to
 make similar products and no longer need the foreign products.  As
 mentioned, Yamaha also imports boats from Trojan, Formula, Tiara and
 Pursuit.  Nissan Marine imports Blackfin and Sport-craft fishing boats as
 well as J-Boat sailboats.  Other examples are listed in the section on
 domestic manufacturers earlier in this report.
 Komatsu Diesel, which manufacturers a number of models of a 36 foot fishing
 cruiser, is now importing boats from Shamrock (USA), Scand Boats (Norway),
 Mochi Craft (Italy), Southern Ocean Yachts (Australia) and Kineo (Austria).
 3.  Automobile Import Companies.  Two Japanese companies specializing in
 importing luxury foreign cars have become powers in boat importing: Yanase &
 Company, Ltd. and Seibu Motor Sales Co., Ltd.  Yanase has gained a solid
 reputation in Japan for not only importing foreign cars but for providing
 good service for them.  The company has a nationwide network of sales and
 service outlets and the company is following a similar strategy for handling
 boat imports.  Yanase presently handles Wellcraft, Hatteras, Carver,
 Mirrocraft, and Stratos.  It is also the Japan representative for Johnson
 outboard engines and Cobra engines.
 Seibu Motor Sales handles Saab, Peugeot and Citroen automobiles and is
 making a major commitment in the marine area.  Part of the huge Seibu Saison
 Group which includes department stores, discount stores, hotels, and many
 other operations, the company now handles Sea Ray, Princess and Bertram
 yachts.  In addition, the company is sole agent in Japan for Volvo Penta
 marine engines, and it powers all of its Sea Rays and Princess boats with
 these engines.  The Seibu Group owns a number of marinas and is involved in
 developing others.  These marinas act as dealers for boats imported by
 Seibu, and the company also has dealers and service centers at other marinas
 around the country.
 4.  General Trading Companies.  Most of Japan's large trading companies have
 entered the boat import business.  Mitsui Bussan, which handles Feeling,
 Baltic, Dynamique and Jeantot sailboats and Ifni, Sonata, Gallart, Phoenix,
 Jeantot and Kavalk powerboats, appears to be the largest trading company in
 the business, but C. Itoh, Mitsubishi Corporation, Sumitomo Corporation, and
 most of the other well-known trading companies have entered this market.
 There are two views on these companies and their prospects.  In the early
 1970's, most of the trading companies rushed into the pleasure boat industry
 when the market was hot, but a number of them pulled out when things slowed
 down after the oil crisis.  Critics point out that Japan's large trading
 companies are skilled at importing commodities but are not good at products
 which require specialized sales and product after-sales service.  On the
 other hand, it can be argued that the trading companies have the resources
 to stick with the business, have a need to diversify into new growth areas,
 and have the kind of connections which are essential for developing new
 marina facilities around Japan.
 5.  Other Miscellaneous Companies.  The rapid growth of the industry has
 attracted all sorts of new entrants, most of which believe that they have
 some existing strength which will allow them to grab a piece of the market.
 For example, Seiyo Continental Hotels, Ltd. have become the sole agent for
 Camper & Nicholsons, the U.K. maker of 100 foot plus luxury yachts.  The
 hotel company explains that it is aiiming to develop "an elegant,
 executive-class concept of marine leisure."  Tokyu Department Store has
 recently become agent for Sealine of the U.K. and Delta of the U.S.
 Matsushita Electric Industrial has tied up with Tobi Dekor, the Japanese
 sole agent for Sweden's Storebro Yachts, and is presently handling the
 import end of the business.  Toyota Motor Corporation has been conducting a
 detailed, year-long study of the marine industry to determine if it is
 attractive enough for it to become involved.  Large Japanese companies
 diversifying into the marine business could be attractive partners or agents
 for American boat manufacturers which have not yet become involved in the
 Japanese market.
 In most cases, foreign-made boats are imported through sole agents,
 particularly in the case of European makers, but there are a number of
 important exceptions.  The Japanese importers naturally prefer an exclusive
 import agreement, arguing that the market is too small for multiple agents,
 that there will be too much price cutting, etc.  But some American companies
 such as Bayliner and Sea Ray, have several agents in Japan which market
 nationwide, and this seems to have increased the manufacturer's volume.  To
 some degree, the interests of the manufacturer and the importer are in
 conflict on this issue.  There is no simple answer for which arrangement is
 best, but it is important to know that sole agent agreements are not always
 the rule, and that just because a prospective agent demands such an
 arrangement, it is not always necessary to give in to such a demand.
 In view of the scarcity of marina space, the marinas in Japan have very
 powerful positions.  They are no longer merely parking spaces for boats, but
 they look for every opportunity to find additional sources of revenue.  One
 of the most important business activities in Japan for an importer is to
 enter into relationships with marinas.  Importers attempt to recruit marinas
 as dealers, but the number of marinas is small and the number of importers
 is large.  The large manufacturers such as Yamaha have entered the marina
 development business in order to increase dealers and to be able to locate
 service centers at certain marinas.  Many private marinas in Japan will
 provide space only to customers who have bought boats from them.       Other
 marinas will require rebates or commissions ranging from 10-20% to put
 another dealer's boat in their marinas.
 One problem which the industry faces in Japan is so-called "parallel
 importing" (in Japanese, heiko yunyu), whereby individuals or small trading
 companies acting on behalf of a customer, purchase boats directly from
 overseas dealers and import them into Japan outside the normal Japanese
 agent's channels.  In this way, they can avoid the dealer's mark up and save
 a considerable sum.  Since retail prices in Japan can be considerably higher
 than the U.S. retail price, the savings on a large boat can be
 considerable.  The owner will not be able to have his boat serviced by the
 authorized dealer in Japan, but the large savings have made this activity
 profitable for a few companies.  There is nothing that can be done about
 this practice in Japan, as it is not illegal, and dealers can only ignore
 it.  It is not a widespread practice and is likely to continue as long as
 there is a large gap between pricing in Japan and prices overseas.
 It is difficult to generalize about Japanese boat pricing.  Japanese agents
 and dealers explain that costs are higher in Japan and that Japanese
 customers require more after-sales service, so their prices have to be
 higher.  Markups of 50-80% are common, although much depends upon the dealer
 and the model.  Parallel imports and heavy competition from so many
 different products on the market are likely to continue to bring prices
 down.  There is also a large market for used boats, which also tends to keep
 prices of new boats in line.
 One Japanese agent for a well-known American powerboat runs an ad in
 Japanese boating magazines claiming that the prices he charges are the same
 as the American retail price plus freight, insurance and customs clearance
 charges, which add about 15% to the American retail price.
 Key Industry Contacts
 Mr. T. Takeuchi
 Inspection Department
 Japan Craft Inspection Organization
 Ichigaya Building, 8th Floor
 2-6 Kudan-Kita 4-chome
 Tokyo 102 Japan
 Tel (03) 3239-00821
 Fax (03) 3239-0829
 Mr. Shigeru Itoh
 Deputy Director
 Inspection and Measurement Division
 Maritime Technology and Safety Bureau
 Ministry of Transport
 1-3 Kasumigaseki 2-chome
 Tokyo 100, Japan
 Tel (03) 3580-3111, ext 2442
 Fax (03) 3503-3246
 Trade Associations
 Mr. Kenji Takagi
 Japan Boating Industry Association
 Asano Building
 Ginza 2-5-1
 Tokyo 104 Japan
 Tel (03) 3567-6707
 Fax (03) 3567-0635
 Mr. Takashi Hasumi
 Director of Planning
 Japan Marina & Beach Association
 Marine Building
 1-23-17 Shinkawa
 Tokyo Japan
 Tel (03) 3553-8420
 The Promotion Center for Yachting and
  Boating of Japan
 3-8, Meijiro 1-chome
 Tokyo 171 Japan
 Tel (03) 3590-9808
 Fax (03) 3590-8325
 Trade Publications
 Mr. Yoshio Doi
 Kazi Co., Ltd.
 2-17 Hamamatsucho 1-chome
 Tokyo 105 Japan
 Tel (03) 3434-5181
 Fax (03) 3434-5184
 Mr. Masaharu Ichiki
 Managing Editor
 Yachting Magazine
 Force Seven Co., Ltd.
 Makino Building 401
 1-15-8 Shiba
 Tokyo 105 Japan
 Tel (03) 3456-6611
 Fax (03) 3456-1700
 Mr. Seiichiro Ohno
 Ocean Life Magazine
 Nichiyama Building
 1-9-12 Ginza
 Tokyo 104 Japan
 Tel (03) 3942-3881
 Private Industry
 Mr. Akiro Kanazashi
 Marketing & Sales Department
 Marine Division
 Nissan Motor Co., Ltd.
 17-1 Ginza 6-chome
 Tokyo 104-23 Japan
 Tel (03) 5565-2683
 Fax (03) 5565-3419
 Mr. Seigo Kato
 General Manager
 Yanase & Co., Ltd.
 Marine Department
 6-38 Shibaura 1-chome
 Tokyo 105 Japan
 Tel (03) 3452-4311
 Fax (03) 3243-8632
 Mr. Yoshiharu Murakami
 Global Marine, Inc.
 Komatsu Building 602
 2-14 Narihira
 Ashiya City
 Hyogo Prefecture 659 Japan
 Tel (0797) 32-7348
 Fax (0797) 34-3676
 Mr. Satoshi Someya
 Boat Coordinator Manager
 Seibu Motor Sales Co., Ltd.
 Marine Division
 2-34-5 Minami Ikebukuro
 Tokyo 171 Japan
 Tel (03) 3981-1261
 Fax (03) 3981-4441
 Mr. Kohei Matsui
 Chairman and Chief Executive Officer
 Marina Ventures Japan, Inc.
 Hakko Building
 3-2-4 Higashi Nihonbashi
 Tokyo 103 Japan
 Tel (03) 3663-3020
 Fax (03) 3663-3019
 Mr. Kohtaro Horiuchi
 Yamaha Motor Co., Ltd.
 2500 Shingai
 Shizuoka-ken 438
 Tel (0538) 32-1184
 Fax (0538) 37-4259
 Mr. Ram Ikeuchi
 Ram Associates, Inc.
 4-10-7 Ohmachi
 Tel (0467) 22-5245
 Fax (0467) 24-2012
 Mr. Keiichi Ishizaka
 Fusion Inc.
 No. 901 Central 246
 1-1-7 Shibuya
 Tokyo 105 Japan
 Tel (03) 3486-2830
 Fax (03) 3406-6061
 Mr. Kenji Sugano
 Managing Director
 Marine Power Internatioal Japan Branch
 No. 27-2 Muramatsu-Chisaki-Shinden
 Shizuoka 424
 Tel (0543) 34-2611
 Fax (0543) 34-2022
 Since the Japanese pleasure boating industry is still in its infancy, there
 are as yet few boat shows in Japan.  The most important is the Tokyo
 International Boat Show, held every year at the Tokyo International Trade
 Center in Harumi in Feburary.  This show has been held every year since 1962
 and it attracts the main participants in the boating industry in Japan.  In
 1991 the show was lengthened to 6 days and paid attendance reached 155,000.
 A week later a smaller version of the show is held in Osaka for four days.
 Smaller boat shows are also held in Kita-Kyushu in late February, in Nagoya
 in March, and in Hiroshima in April.
 For information on these boat shows, contact the Japan Boating Industry
 Association at the address shown in the industry contact section of this
                                TABLE 1
                U.S. PLEASURE BOAT EXPORTS TO JAPAN, 1987-90
                         (Thousands of Dollars)
 Item and HS            1987      1988      1989      1990      90/89
 Inflatable boats      1,362       477       363        59       -84%
 Sailboats             2,380     6,119     6,920    16,148      +133%
 Powerboats           12,352    24,537    61,757   116,754       +89%
 Rowboats & canoes for   556     1,219     2,772     6,505      +135%
 use w motors or sails
 Outboard motorboats   3,520     6,520     5,908     4,787       -19%
 All other pleasure    1,688     4,115     9,189    18,861      +105%
 yachts and vessels
        TOTALS        21,860    42,518    86,828   163,115       +88%
 Source:  U.S. Department of Commerce
 1.  Data for 1987 and 1988 are DOC estimates.  In 1989, the U.S. adopted the
 new harmonized system (HS) of product category classifications, which in
 many cases were different from the categories used until 1988.  The 1987 and
 1988 figures are estimates of what the previous categories would be under
 the new system.
 2.  Beginning with 1990 data, a few categories were changed in accordance
 with an agreement between the U.S. and Canada to unify classification
 categories.  This resulted in minor changes in sailboat categories
 8903910025 and 8903910035, and the creation of two new sailboat categories,
 8903910065 and 8903910080.
                                TABLE 2
               U.S. SAILBOAT EXPORTS TO JAPAN, 1987-1990
                          (Thousands of Dollars)
 Item and HS            1987      1988      1989      1990      90/89
 Sailboats w motors      594     1,620     1,381     2,692       +95%
  not exc. 9.2m
 Sailboats w motors      572     1.128     4,629     6,993       +51%
  exc. 9.2m length
 Other Sailboats          46       558        45       112      +149%
 Other Sailboats w/o     584     1,163       571     3,628      +535%
 Sailboats w/o motors      0         0         0     1,021       n.a.
  6.5m to 9.2m
 Other sailboats w/o       0         0         0     1,702       n.a.
  motors exc. 9,2m
 Other sailboats w/o     584     1,163       294         0       n.a.
        TOTALS         2,380     6,119     6,920    16,148      +133%
 Source:  U.S. Department of Commerce
 1.  Data for 1987 and 1988 are DOC estimates.  In 1989, the U.S. adopted the
 new harmonized system (HS) of product category classifications, which in
 many cases were different from the categories used until 1988.  The 1987 and
 1988 figures are estimates of what the previous categories would be under
 the new system.
 2.  Beginning with 1990 data, a few categories were changed in accordance
 with an agreement between the U.S. and Canada to unify classification
 categories.  This resulted in minor changes in sailboat categories
 8903910025 and 8903910035, and the creation of two new sailboat categories,
 8903910065 and 8903910080.
                                TABLE 3
                 U.S. POWERBOAT EXPORTS TO JAPAN, 1987-1990
                          (Thousands of Dollars)
 Item and HS            1987      1988      1989      1990      90/89
 Inboard powerboats      845     4,158    22,917    30,907       +35%
  not exc. 8m
 Inboard powerboats    6,995     9,313    26,077    64,429      +147%
  exc. 8m
 Powerboats with I/O     999     2,065     3,326     4,639       +39%
 drives not exc. 6.5m
 Powerboats with I/O   3,513     9,011     9,437    16,779       +78%
 drives exc. 6.5m
         TOTALS       12,352    24,537    61,757   116,754       +89%
 Source:  U.S. Department of Commerce
 1.  Data for 1987 and 1988 are DOC estimates.  In 1989, the U.S. adopted the
 new harmonized system (HS) of product category classifications, which in
 many cases were different from the categories used until 1988.  The 1987 and
 1988 figures are estimates of what the previous categories would be under
 the new system.
 2.  Beginning with 1990 data, a few categories were changed in accordance
 with an agreement between the U.S. and Canada to unify classification
 categories.  This resulted in minor changes in sailboat categories
 8903910025 and 8903910035, and the creation of two new sailboat categories,
 8903910065 and 8903910080.
                                TABLE 4
                JAPANESE PLEASURE BOAT IMPORTS, 1986-1990
                        (Millions of Yen)
 Category and       1986     1987      1988     1989    1990   90/89
 HS code
 Yachts/Other     (3,630)  (7,968)      --      --      --       --
 Pls. & Sports
 Yachts over        0        (384)      --      --      --       --
 Inflatables        --        --        897      447     571   +106%
 Sailboats          --        --      2,063    5,206   6,758    +30%
 Motorboats         --        --     10,281   17,697  36,414    +99%
 Other Pleasure     --        --      1,847    4,452   8,877    +28%
     TOTALS        (3,630)  (8,352)  15,088   27,802  52,620    +89%
 SOURCE:  Ministry of Finance exports and imports statistics.  Due to
 adoption of the HS codes beginning in 1988, figures on the same basis for
 1987 and earlier are not available.  The figures shown in parenthesis for
 1986 and 1987 are under the old codes, of which there were only two for
 pleasure boats.  The totals for 1986 and 1987 should be comparable with
 those for the following years.
                                TABLE 5
                  (Millions of Yen, Share in Percent)
 Country           1988    Share     1989    Share     1990    Share
                            Pct               Pct               Pct
 Taiwan           2,337     15.5    2,968     10.7    5,118     9.7
 United Kingdom     674      4.5    1,078      3.9    3,673     7.0
 France             585      3.9    1,435      5.2    2,001     3.8
 Netherlands         16      0.1       98      0.4      309     0.6
 Fed. Republic      185      1.2      258      0.9      649     1.2
   of Germany
 Italy            1,037      6.9    2,215      8.0    5,971    11.3
 Canada             286      1.9      453      1.6    1,051     2.0
 U.S.A.           7,365     48.8   13,308     47.9   26,934    51.2
 Australia          307      2.0      308      1.1      254     0.4
 New Zealand        138      0.9      392      1.4      587     1.1
 Others           2,158     14.3    5,289     19.0    6,073    11.5
       TOTALS    15,088    100.0   27,802    100.0   52,620   100.0
 Source:  Ministry of Finance exports and imports.  Percentage totals do not
 equal 100 due to rounding.
                                TABLE 6
                            (HS 890391000)
                    (Upper Line:  Millions of Yen;
                        Lower Line: Units)
 Country               1988        1989        1990        90/89
 Taiwan                 258         375         378          +1%
                         18          23          22
 Denmark                111         247         274         +11%
                        157         215          28
 United Kingdom         132         350         736        +110%
                         59          75         153
 Netherlands             16          98         309        +215%
                          9          10          22
 France                 549       1,423       1,914         +35%
                         63         133         136
 Fed Rep of Germany     142         215         536        +149%
                         37          45          53
 Finland                 85         373         481         +29%
                          6          14          13
 U.S.A.                 330         793         975         +23%
                        172         126         135
 Australia              226         202         202          +0%
                         51          86          44
 New Zealand            138         392         585         +49%
                         16          37          32
 Others                  76         738         368         -50%
                         13         120          70
        TOTALS        2,063       5,206       6,758         +30%
                        601         884         708
 Source:  Ministry of Finance Exports and Imports
                                TABLE 7
                              (HS 890392000)
                       (Upper Line: Millions of Yen;
                            Lower Line: Units)
 Country               1988        1989        1990        90/89
 Taiwan               1,181       2,170       3,959        +82%
                         66         130         179
 Hong Kong                7         362         273        -25%
                          1           4           6
 Singapore              105         228         440        +93%
                          5           9          13
 Norway                  62         124         196        +58%
                         10          15          18
 Sweden                 731       1,725       2,091        +21%
                         28          38          44
 United Kingdom         410         670       2,773       +313%
                         17          26          95
 Italy                  811       2,069       5,836       +182%
                         14          18          61
 Canada                 230         260         790       +203%
                         48          27          31
 U.S.A.               5,954       9,059      18,450       +104%
                      5,343       1,477        1718
 Others                 790       1,030       1,606        +56%
                        137          65          73
       TOTALS        10,281      17,697      36,414       +106%
                      5,669       1,809       2,238
 Source:  Ministry of Finance Exports and Imports.
                                TABLE 8
               OTHERS, NON-INFLATABLE)
                          BY COUNTRY, 1988-1990
                            (HS 890399000)
                      (Upper Line: Millions of Yen;
                            Lower Line: Units)
 Country               1988        1989        1990        90/89
 Korea                   13          12           6         -50%
                        326         257          67
 Taiwan                  59          30         350       +1067%
                      1,486         261       4,223
 Norway                   6          21          46        +119%
                         83         285         537
 United Kingdom         128          55         126        +129%
                        262       1,167       1,079
 France                  32           9          47        +422%
                          7         234         467
 Fed Rep of Germany      37          40         112        +180%
                        233         521       1,064
 Italy                  224         137         135          -1%
                          8          14         358
 Canada                  56         189         261         +38%
                        584         434         946
 U.S.A.               1,072       3,437       7,494        +118%
                      5,339      12,363      21,634
 Australia               68         106          52         -51%
                        597         551         156
 Others                 152         416         247         -41%
                        291         764         809
        TOTALS        1,847       4,452       8,877         +99%
                      9,216      16,851      31,340
 Source:  Ministry of Finance Exports and Imports
                                TABLE 9
                          (Millions of Yen)
 Category           1987        1988      1989      1990      1991
                                                     Est       Est
 Motorboats*       9,976      14,947    21,122    25,346    25,346
 Sailboats         2,471       3,011     2,863     2,900     2,900
 Rowboats          1,862       1,610     1,875     2,000     2,000
 Personal          6,500      13,797    16,341    15,000    12,000
   TOTALS         20,809      33,365    42,201    45,246    42,246
  * Includes inflatables.
 SOURCE:  Japan Boating Industry Association annual survey of Japanese boat
 manufacturers.  Surveyed companies include JBIA members, Tokyo Boat Show
 exhibitors, companies which advertise in the boating press, and other
 companies which have responded to the survey in the past.  36 companies'
 responses are included in the 1989 figures.
 Estimates for 1990 and 1991 are by Wallace Offutt Consulting.
                                TABLE 10
                JAPANESE PLEASURE BOAT EXPORTS, 1986-1990
                      (Upper Line: Millions of Yen;
                            Lower Line: Units)
 Category and       1986     1987      1988    1989    1990    90/89
 HS code
 Inflatables       (1,418   (1,228)     --      --      --      --
 89.01-220        (17,304) (14,483)
 Other Boats       (4,166)  (7,455)     --      --      --      --
 Sports/Pleas.     (3,428) (17,932)
 Inflatables        --        --      1,120     985     948    -3.8%
 890310000                           13,305  10,317   9,298
 Sailboats          --        --        628     106     104    -1.9%
 890391000                               31      39      20
 Motorboats         --        --      1,105      66      39   -40.9%
 890392000                               77      44      19
 Other Pleasure     --        --     11,227  10,352   8,742   -15.6%
  Boats                              37,519  35,903  30,774
     TOTALS        (5,584)  (8,683)  14,080  11,509   9,833   -14.6%
 SOURCE:  Ministry of Finance exports and imports statistics.  Due to
 revisions in the HS codes beginning in 1988, figures on the same basis for
 1987 and earlier are not available.  The figures shown in parenthesis for
 1986 and 1987 are under the old codes, of which there were only two for
 pleasure boats.  It is thought that the totals for 1986 and 1987 are
 comparable with those for the following years.
                                TABLE 11
                         THE U.S., 1986-1990
                     (Upper Line: Millions of Yen;
                         Lower Line: Units)
 Category and       1986     1987      1988    1989    1990    90/89
 HS code
 Inflatables       (1,129)   (960)      --      --      --      --
 89.01-220        (13,528) (10,987)
 Other Boats        (923)   (3,589)     --      --      --      --
 Sports/Pleas.      (457)  (11,565)
 Inflatables        --        --        856     627     640    +2.1%
 890310000                           10,097   6,647   6,084
 Sailboats          --        --        470      27      10   -63.0%
 890391000                               12       7       2
 Motorboats         --        --      1,105       0       0      --
 890392000                                1
 Other Pleasure     --        --      8,963   8,488   7,049   -17.0%
  Boats                              30,547  30,864  27,078
     TOTALS        (2,052)  (4,549)  11,294   9,119   7,689   -15.7%
 SOURCE:  Ministry of Finance exports and imports statistics.  Due to
 revisions in the HS codes beginning in 1988, figures on the same basis for
 1987 and earlier are not available.  The figures shown in parenthesis for
 1986 and 1987 are under the old codes, of which there were only two for
 pleasure boats.  It is thought that the totals for 1986 and 1987 are
 comparable with those for the following years.
                                TABLE 12
               U.S. PLEASURE BOAT IMPORTS FROM JAPAN, 1987-90
                         (Thousands of Dollars)
                        1987      1988      1989      1990      90/89
        TOTALS        61,358   125,001    70,164    39,983     -40.0%
 Source:  U.S. Department of Commerce
 Note: Data for 1987 and 1988 are DOC estimates.  In 1989, the U.S. adopted
 the new harmonized system (HS) of product category classifications, which in
 many cases were different from the categories used until 1988.  The 1987 and
 1988 figures are estimates of what the previous categories would be under
 the new system.
                               TABLE 13
                 1990  U.S. PLEASURE BOAT EXPORTS TO JAPAN
 Item and HS              U.S. Dollars       Units         Weight
 Inflatable boats            58,590            2            2,953
 Sailboats               16,148,448          260          867,184
 Powerboats             116,754,649       10,439         6,894,634
 Rowboats & canoes for    6,505,426          853          496,798
 use w motors or sails
 Outboard motorboats      4,786,998          785          481,322
 All other pleasure      18,861,207        4,139        1,168,226
 yachts and vessels
                                TABLE 14
                 1990 U.S. SAILBOAT EXPORTS TO JAPAN
 Item and HS            U.S. Dollars        Units        Weight
 Sailboats w motors       2,692,276           39         166,505         not
 exc. 9.2m
 Sailboats w motors       6,992,823           51         314,904
  exc. 9.2m length
 Other Sailboats            112,325           10           5,870
 Other Sailboats w/o      3,628,460          125         257,602
 Sailboats w/o motors      1,020,636          25          59,449
  6.5m to 9.2m
 Other sailboats w/o       1,701,926          10          62,854
 motors exc. 9,2m
        TOTALS            16,148,448         260         867,184
                                TABLE 15
                  1990 U.S. POWERBOAT EXPORTS TO JAPAN
 Item and HS          U.S. Dollars       Units       Weight
 Inboard powerboats     30,907,370       9,205      2,089,572
  not exc. 8m
 Inboard powerboats     64,428,527         584      3,308,819
  exc. 8m
 Powerboats with I/O     4,639,293         201        336,443
 drives not exc. 6.5m
 Powerboats with I/O     16,779,459        445      1,159,800
 drives exc. 6.5m
         TOTALS         116,754,649     10,439      6,894,634
 Source:  U.S. Department of Commerce

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